It’s no secret that the real estate market has shifted in the past year, causing many hopeful first time homebuyers to wonder if they missed their chance or if they should wait for 3% interest rates to return. While you likely will not see those interest rates again, it doesn’t mean your chance to become a homeowner has passed. In fact, there are many reasons to prioritize buying a home in 2023.
If you are not sure yet if it makes more financial sense to rent or buy in 2023, here are 3 things to keep in mind.
1. Buying a home allows you to step away from rising rental costs
The cost of owning a home has gone up in recent years, and if you look at the overall trajectory of home values over the past decades that makes sense. Though there are some dips and the rare market crash, the overall direction of home values is always up.
This is also true of rental costs, which consistently rise with inflation and increasing home values. As long as you are a renter, you will continue to pay more and more for the same property over the years. When you purchase a home, you step out of that cycle and lock in your monthly housing payment for the foreseeable future.
For example, if your rent is currently $1,500, and a mortgage on a comparable home would be $1,800, you may think it is more affordable to continue renting. However, in a few years the rent on that same home is likely to have increased to $2,000 while your mortgage remains the same.
The bottom line is, the earlier you can afford to become a homeowner, the more money you will save over a lifetime of monthly housing expenses.
2. Homeownership is one of the best wealth building tools
One of the reasons homeownership is so valued and promoted among financial experts is because it is such powerful wealth building tool. When you own a home, you are increasing your net worth with each mortgage payment you make. You own an asset that can be leveraged to finance other ventures or be passed on to future generations.
Even if owning a home costs a bit more than renting at the beginning, renting will never provide you the same opportunities and passive financial growth that owning will. And remember, the longer you own a home, the more affordable it becomes.
3. Owning a home protects you against financial factors outside your control, like inflation
Many hopeful first time home buyers are concerned about inflation. Owning a home is one of the best safeguards against inflation. The price you purchase your home for today is essentially frozen in time. Where rental costs will rise with inflation, the price you paid for your home will be set.
In addition to being able to lock in your monthly mortgage payment, inflation will begin to benefit you as a homeowner. As inflation increases, your home’s equity will increase alongside it and open up opportunities to sell for a profit, refinance to lower your monthly payment, or take out a line of credit from the equity to fund home improvement or other projects.
One of the best things you can do when buying your first home is to choose an agent who is knowledgeable and experienced in the area you are considering. Ready to buy in Clermont or anywhere in the Orlando real estate market? Contact me today!